EXCLUSIVE: Pandora’s global COO talks expansion, transparency & changing its relationship with the industry

As the internet radio veteran rolls out its rebrand and readies its Spotify rival, TMN chats with Pandora COO Sara Clemens about the label deals which will aid its global expansion, the task she was handed when the joined the company, and more.

Two years ago, when Pandora had only been active in Australia and New Zealand for just over a year, the streaming veteran hired Sara Clemens as its Chief Strategy Officer. Part of Clemens’ remit was to change the nature of Pandora’s relationship with the music industry – not an easy task given artists’ initial apprehension toward streaming as a whole.

Last month, Pandora secured new licenses with Sony, Universal, Warner and Merlin for new feature sets in the US. It’s currently negotiating with major and independent labels in Australia and New Zealand to internationalise those feature sets, and by mid-2017 will have rolled out its on-demand Spotify rival service in all three of its territories. With the labels now firmly on side, Pandora is also assessing which markets to launch in outside of the US, Australia and New Zealand.

Needless to say, following over a decade without an on demand service for its 78 million listeners, Clemens has more than achieved the directive.

In March, Clemens was promoted to Chief Operating Officer. The announcement arrived around the same time Founder Tim Westergren returned as the company’s CEO, the two moves serving as an outward commitment to becoming a digital music company for artists and labels.

“Pandora’s relationship with the music industry has really shifted over the course of the last 12 to 18 months.”

Clemens is seated at Pandora’s Australian HQ in Sydney, discussing the motivation behind the Music Makers Group. Founded in October 2014 to create opportunities for labels and artists, its Artist Marketing Platform (AMP) project is perhaps the Group’s biggest investment in the music industry.

Centred around transparency between artists and the data usually analysed by labels, the AMP shares information like how many spins are happening per song, how many listeners have started a Station based on artist, the Thumb Up/Thumb Down ratio of songs and demographic data, including age, location and gender.

Using the AMP, artists can plan tours based on that data and map out a tour path. It’s also being used to help decide on album singles with artists checking individual song streams to decide which tracks are trending.

“[Artists] have access to where their music is spinning and the number of spins, so artists are then armed with that information when they speak to their labels and their managers about what’s happening with their music,” says Clemens. “[…] Those are the kinds on investments you only see in a music company.”

In March during Clemens’ first few days as COO, Pandora added AMPcast to the AMP, a tool allowing artists to record audio messages for their fans. Since AMPcast’s launch, Pandora has served over 450 million artist audio messages to listeners and is seeing click through rates in the 3-4% (2-3x what you see across social media) range from the artists’ ‘call to action’ messages.

These tools not only allow artists to engage with fans to build their businesses both on and off Pandora, but pitches the service as a transparent ally to the music industry.

“You’re really seeing the labels have a strong desire to want to work with us,” says Clemens. “And that was really the foundation of the new deals that we’ve done, [offering] access to the Artist Marketing Platform. Frankly, we negotiated real win-win deals with the labels where it’s driving incremental revenue to them and it sets a good foundation for our business.”

As reported in TMN last month, Pandora is set to have three tiers: its AU$6.99 tier Pandora Plus, which replaced Pandora One, its free ad-supported version, and its $9.99 still-unnamed streaming service which arrives in the US at the end of the year and in Australia and New Zealand halfway through 2017.

“With all new services you sort of bring on 1%, then 5%, then 10%, just to make sure that nothing is broken, and you balance load them and see how the features work,” explains Clemens. “So we’ll do that through the early part of next year in the United States, then once we get to 100% we effectively start internationalising the platform.”

Clemens isn’t being vague when she uses the term ‘internationalising’. Pandora’s launches in Australia and New Zealand initially were essentially pilots to see whether the experience of Pandora would translate to other markets. Of course, as has widely been reported, the acceleration in the two territories was a success. When Pandora launched in Australia in 2012 it joined 17 other streaming services, it now draws 1.1 million active listeners every month. This is despite notably light marketing; Pandora’s First campaign in 2015 was its first and only national ad push since its launch. Similarly, in the US, it didn’t do any marketing until 2014, nine years after launch.

Now, Pandora is looking to expand. However, as Clemens tells TMN, the service is eyeing territories that have a similar passion for music as in the US.

“There are a lot of markets in the world where music does not have a lot of revenue associated with the consumption right now,” she explains. “There are about 15 markets globally that account for about 84% of global revenue.

“We’re really focusing on ‘How do we make sure we’re going into those markets in a thoughtful way?’ and that we’re building a sustainable long-term, profitable business. Because if we don’t, it’s not good for the music industry if there are no platforms and services for streaming.”

Clemens also said Pandora is not launching anywhere until its full three-tiered product suite is released.

“We’re looking at the moment at what the markets are that we would launch after Australia and New Zealand, with the new services,” she says. “The one thing we’re doing is being very thoughtful.”

Long-running Pandora has watched the rise and fall of many of its competitors over the years. Most notably, though, when Rdio went into administration in November 2015 – following an inability to make an adequate return on its investments – Pandora bought its assets for US$75 million.

Pandora acquired Rdio’s product, business affairs and engineering teams, and its technology platforms. Those teams are now working with Pandora to create the best of both worlds. In fact, Rdio’s ex-Head of Product Chris Becherer is now Head of Listener Product at Pandora and is driving the upcoming on-demand service.

Pandora is now integrated into 1,250 consumer electronic devices, from mobile phones to home audio systems, car models, to smart TVs and even a fridge. It may be a music streaming veteran, but it’s certainly moving at a similar speed as its competitors

Longevity like that is only achieved by forward-thinking players that are less concerned with capitalising on the music industry than they are with nurturing it. Clemens’ thoughts on the publicly disputed issue of streaming exclusives are an example of this.

“We don’t believe that exclusives are in the best interest of the industry over the longer term. Pandora’s belief is that artists are best placed building the largest fanbase. Music from streaming comes from consumption; the more music can be consumed the greater your revenue stream will be.

“I think there are some platforms that have used them as amarketing vehicle in order to gain subscribers and I don’t think that’s worked very well. I think people churn off. If you look at the churn rates on Tidal for example or Apple Music, you certainly see people are using that time to listen to the exclusives but they’re not necessarily staying.”